Precious Metals.

[orourkeda]

What is the best strategy for investing in silver or gold?

Should one start with small or larger amounts and invest for the short, medium or long term

 

[ringledman]

I think the most import thin about PM's is where do you hold it.

Who owns your gold and silver? In your house/garden nicely hidden if the preverbial does hit the fan (isn't this the reason to own PM's), or do you trust a bank vault in London, Switzerland or the USA?

If the economy tanks further and a real crisis ensues then governments are going to look at stealth ownership of those nice bank vaults. Buy at $1,600 an ounce and then next day re-price gold at $10,000 an ounce.

Likewise if a global crisis ensues then do you really want a 3rd party to hold your gold? There are a lot of conspiracy theories about whether the ETFs and other electronic forms of ownership actually hold what they say and dont lend it out. Who knows.

Over the long long (100 years or so) term gold has delivered a very poor return. However all asset classes go in secular cycles of 10-25 year uptrends followed by 10-25 year downtrends.

I would hazard a guess that gold and silver are 1/2 way to 2/3 way through a secular uptrend.

If you are investing for the short to medium term then expect at least 30-50% volatity, especially for silver.

 

[Chris]

There is a good gold thread on here that is quite long and gives some good recommendations about how and where to hold good and silver. Ringledman makes good points and ultimately it is safest to have it physical form ideally in a safe, well hidden and insured.

Over the long long (100 years or so) term gold has delivered a very poor return. However all asset classes go in secular cycles of 10-25 year uptrends followed by 10-25 year downtrends.

What you have to take into account though is that for 60 of the last 100 years currencies have been, albeit loosely, tied to gold. If you look at 40 years of fiat currency then you get a better picture of how gold performs in a fiat world.

 

[ringledman]

What you have to take into account though is that for 60 of the last 100 years currencies have been, albeit loosely, tied to gold. If you look at 40 years of fiat currency then you get a better picture of how gold performs in a fiat world.

Yes good point. So since Nixon let the dollar collapse gold has spiked, collapsed and then risen. So my understanding is that the real driver for Gold rising or falling is 'real' interest rates. Volker raising rates to stop inflation was what brought gold down.

Faber says he has done some empirical research and suggests that the time to cash in gold is when interest rates turn positive in the world. Virtually the whole world is running negative interest rates and this will continue for at least 5 or even 10 years he suggests.

 

[Rory Gillen]

Buying physical gold comes with two risks (i) the costs of purchase are higher and (ii) you leave yourself open to theft unless you store it in a bank or something (more cost and open to the risk of the local bank going bust). While theoretically physical gold is safer, in practice the giant US State Street investment bank's Gold ETC (listed on the US market - ticker code GLD) holds the gold in HSBC in London. If armaggedon hits, then anyone with a unit-linked fund is lost as your assets are owned by the life company, not the fund and not you - now that's what I call counter-party risk!


Rory Gillen

 

[Chris]

Rory, I just bought gold coins (Maple Leaf) from a German company at 3% markup to spot price and 1.7% markup to their own purchase rates. Places like gold money and billion vault charge between 1 and 2%, and I imagine there are also fees with ETCs and ETFs (under 1%?). You need to shop around, but I don't think that higher purchase costs are really a risk.